Opening up ‘digital trade’ between US and China just as important as solving tariffs, IBM CEO says

Ginni Rometty, CEO of IBM, speaking at the Business Roundtable CEO Innovation Summit in Washington, DC on Dec. 6th, 2018.

Janhvi Bhojwani | CNBC

PARIS — Solving the question of “digital trade” is just as crucial to trade talks between the United States and China as conversations around resolving tariffs on physical goods, IBM CEO Ginni Rometty told CNBC Thursday.

“I’m hopeful that these things get resolved,” Rometty told CNBC’s Karen Tso, speaking about trade tensions between the two countries. “But I also say that with all the talk about tariffs and the like around physical goods, some of what needs to be resolved are the rules around digital trade.”

Rometty defined such digital trade as the flow of data between countries, arguing that the exchange of information was as important as lifting trade barriers when it comes to physical imports.

“That’s almost more important that there be free flow of data across borders and there not be localization of data,” she said. “So those are all very serious issues to be worked on and I’m hopeful the trade talks address those things.”

Concerns have been raised by industry leaders over the potential for the U.S. and China to drift further apart when it comes to data and the internet. Former Google CEO Eric Schmidt, for instance, has warned there could be a “bifurcation” in the internet, with one network led by America and the other led by China.

It comes amid a spike in trade tensions between Washington and Beijing. The U.S. recently raised tariffs on $200 billion worth of Chinese goods to 25% from 10%, while China retaliated on $60 billion worth of U.S. imports. President Donald Trump has also threatened to impose levies on a remaining $325 billion worth of Chinese goods imported to the U.S.

The Trump administration also recently declared a national emergency over the threat to American technology, adding Huawei to a list that would make it more difficult for the Chinese telecom giant to conduct business with U.S. companies.